But here's the problem: the JACK Audio system used with Linux is not intuitive. The software as a whole is buggy, lagging and offer little support. I've tried producing with Linux but it's really REALLY hard. There's a very community doing it, so everything about it is rather limited. There's no 'hardcore' producing tools for Linux.

All I can give you help with is pointing you in the direction that seems valid : Ubuntu Studio. You WILL need a lot of Linux knowledge since some parts of the usage is not very intuitive.

Just a heads up: Look for their WIKI for driver support and extra software. If you are already using LINUX you can get the software list from their website and see what programs you should get.

Sorry for coming in late, but in addition to the other tools mentioned, here's a few more:

Renoise is modeled after the old amiga tracker style interface, but with a lot of nice and advanced features. If you're not used to this kind of sequencer it may take some turns to make sense of it, but it's amazingly effective when you get the hang of it. Has a built in sample and instrument editor, and can use most plugin formats available on linux (incl. VST and LV2) as well as it's own built in effects. Great looping and custom instrument support.

Mixbus is a commercial offering where the guys from Harrison Consoles have added their mixer logic to Ardour. For a more traditional DAW this is very capable, especially for mixing. It lags a bit behind Ardour on other features, which may or may not matter, depending on your needs.

Tracktion has released a beta version of their music production/composition software for Linux. I haven't had time to play much with this one yet, but it looks interresting. Supports only the older LADSPA plugin standard in addition to native Linux VSTs, but has an interresting twist of setting up and routing effects between each others. You can of course mix internal and external (both LADSPA and VST) effects into "stacks" that you can apply to samples or loops. This one still has a few rouch edges, but it's worth checking out! This one also has a strong focus on looping if that's what you're after.

Finally, I think it's worth mentioning that Ardour is progressing very nicely, and Ardour 3 is a big step towards matching other commercial DAW's I've used both in features and ease of use.

It's not as hard as it seems. Here's a simple setup on an old EeePC 701 (but I also run it on my PC, both with WattOS installed). The blogpost is in Dutch, but the pictures basically tell all about configuring QjackCtl, with a simple midi-keyboard. Also I use Hydrogen, Yoshimi and Hydrogen, and record it in Audacity.

I thought I would answer too. Even though there are quite a few tips here already, some other things need to be listed to actually answer the question, from my personal experience of course. Here are the things I would most likely use to achieve what you are trying to do:

ZynAddSubFX is a good synth that you can control with your midi keyboard.

Audacity is great to record and edit samples, extract bits and pieces from bigger recordings and apply a myriad of effects to them.

FreeSound is a good website to find open-license samples and recordings. The Internet Archive can also provide sounds, if you are looking for more obscure materials - same, open licenses are the norm there.

Hydrogen is a good advanced drum-machine that will let you create nice drum loops.

LMMS is a digital audio workstation that will let you use plugins to produce sounds (including Hydrogen and ZynAddSubFX amongst others), and use your existing samples at the same time, to put them all together into a song. Version 1.0.0, which is a huge improvement in usability and capabilities (and probably stability as tons of bugs have apparently been fixed) has been released at the end of March 2014.

I believe it is worth mentioning Qtractor, an Audio/MIDI multi-track sequencer. I have only played with it for a few hours, but I find it very powerful, lightweight and smooth, and it is very frequently updated and augmented. Automation, plugins, Jack, very intuitive controls and shortcuts make it a very useful piece of software. I really recommend it!

SooperLooper and Freewheeling are live looping samplers that would be great for live performances but also to record a track on the go.

Pure Data is a visual programming language to process and generate sound and more - more for an experimental project; software "written" with it can be used for live performance too.

And Jack + QJackCtl if you want to link all of those pieces of software and experiment with connections and parameters, as well as making sure you have control over your sound server!

All the software mentioned is open source, which is even better than just free :)

If you want to start with just one element, I recommend you try LMMS or Qtractor. They are the two pieces of software in the list that include the most functionalities with what you want to do. So if they suit you and see where you need to extend afterwards, or if you need to replace them with single separate elements instead.

Interestingly, while answering this question, I realised that many of the projects I thought had been abandoned for years have seen new versions released recently. Open source sound production on Linux is alive and well! :)